Municipality of Istanbul pulls out of $15bn shipping canal project

ISTANBUL: The municipality of Istanbul is to pull out of a controversial $15 billion project to build a shipping canal on the edge of the city. The announcement, made in Arabic by a spokesman for Istanbul Mayor Ekrem Imamoglu, came a day after Turkish presidential communications director, Fahrettin Altun, released a promotional video of the Canal Instanbul project in Chinese.
Companies from China are expected to shoulder most of the costs of building the 45 km waterway, which will link the Black Sea to the Sea of Marmara with the aim of easing shipping congestion in the adjacent Bosphorus.
However, Turkish President Recep Tayyip Erdogan’s “dream” megaproject has run into huge opposition from Istanbul citizens over environmental and economic concerns.
The Istanbul municipality’s announcement to withdraw from the scheme, is thought to have been delivered in Arabic in an attempt to dissuade Arab investors from buying land around the “second Bosphorus.”
Turkey’s ruling Justice and Development Party (AKP) expects the canal to carry up to 160 vessels a day when completed in 2025 and the tendering process for its construction is due to get underway soon after the project was given the green light from the Ministry for Environment and Urban Development.
But critics claim that as well as the cost to the economy, scientific findings have shown the canal could prompt new earthquakes, undermine the city’s wastewater system, change salinity and lead to more cuts in water supplies.
“It’s either the canal or Istanbul. We can’t have both,” Imamoglu said recently, adding that the project was a “betrayal” of the city.

But Erdogan said: “Whether they like it or not, Canal Istanbul is being built.”
In a televised interview on Sunday, the Turkish leader said warships would be able to use the canal, possibly violating the 1936 Montreux Convention, an international agreement aimed at guaranteeing stability and security in the Black Sea region and ensuring the free passage of ships through the Bosphorus, except in times of war.
In 2015, when relations between Turkey and Russia were at an all-time low over the shooting down of a Russian fighter jet by Syrian rebels, a Russian naval ship passed through the Bosphorus with a sailor standing on deck armed with a ground-to-air missile.
Erdogan claims that the Montreux Convention was only “mandatory” for the Turkish straits, and the Canal Istanbul project remained outside of its scope.
With foreign currency reserves in Turkey diminishing and the Turkish lira falling against the dollar and euro, investment in the real estate sector has become the principal way to bring in foreign cash and strengthen the economic parameters ahead of any snap elections.
Economist Mustafa Sonmez told Arab News: “The municipality will not assume any cost of the construction for the Canal Istanbul project because it canceled all the protocols that were signed before, during the rule of the AKP mayorship. This is a project that is being discussed just for rent-seeking and changing the domestic agenda of the country.”
He said the project model was not suitable to be built with a public-private partnership and within the scope of the build-operate-transfer model.
“The contractor cannot be pleased with the passage turnover of the ships, and it would be an unnecessary and risky choice to use the canal as long as the Bosphorus is free of charge.”
He added that if the project costs were met by state resources, it was unclear how it would be financed in the light of economic indicators for the country. Turkey’s central government budget balance recorded a deficit of 92.94 billion Turkish lira ($15.58 billion) in the first 11 months of 2019. The Canal Istanbul project is estimated at costing between $15 billion and $20 billion.